Project W: From Startup to Scale-up
"Honestly, I feel so bad about the advice I gave while running YC."
OpenAI founder and former head of Y Combinator recently made this statement while on a global tour to advance the dialogue on the value of AI. He notes that in starting OpenAI he followed NONE of his advice about starting small, testing with users, and raising money later. Altman's approach can be different because he is already a known founder, with resources and networks. But there is a bigger story here about the growing tension in understanding entrepreneurship.
The challenge is that advisors and former founders often rely on a favorite method from Lean Startup to Business Model Canvas. Unfortunately, this static approach is like the old saying, "When all you have is a hammer, everything looks like a nail."
On the contrary, the opportunity for entrepreneurs today is to be flexible in thinking and action, so that they utilize the most effective methods for their startup based on their specific context. Increasingly, academics are advancing research and our understanding of a variety of evidence-based entrepreneurial methods from Effectuation to Lean Startup to Strategy. Each of these methods are grounded in different philosophical/logical perspectives—which means that even if they look similar, they can work very differently.
Put Entrepreneurial Methods into Action with your Work Products
New research from Swedish scholar Henrik Berglund encourages entrepreneurs to focus less on what method they are using and instead take a more careful look at the work products they make. The central activity of entrepreneurship is moving from an idea (the abstract) to a thriving business (the concrete). During this process, an entrepreneur will create a number of work products or artifacts that will range from an email trying to bring on early collaborators, to a Figma prototype, to a detailed pitch deck. By keeping two key ideas in mind, you can ensure your actions leverage a broader tool kit:
- Am I sharing something Distinct or Mutable?
Entrepreneurship frequently requires gaining the collaboration of other people or organizations. When you draft that next email telling them about your venture and why they should collaborate, how much room for flexibility are you placing in your pitch? Berglund's research points out that by making your pitch more mutable/open-ended you are allowing for your partner to tap into their own imagination as they consider ways they might partner with you. Asking a partner to co-create and tap into their own imagination is a key strength of Effectuation. On the other hand, maybe you've sent this advertisement to thousands of potential customers and the goal was to specifically test a specific message/language (Lean Startup). Being mindful of work products, and the degree to which you are or are not being open-ended, is a subtle but important element of the craft of expert entrepreneurs.
When seeking feedback, am I Testing or in Collaborative Mode?
A central tenant of Lean Startup is in testing hypotheses to efficiently gain information. The idea is not to engage your customer in what they think or want the product to be, but rather to use a set of customer engagements in specific ways to run experiments. With digital products, startups can run hundreds of experiments on user features, against specific customer segments, to rapidly learn and enhance their product. An entrepreneur that doesn't have Lean Startup in their toolbox is basically missing a screwdriver. However, sometimes giving your customer a prototype and asking them to collaborate in making it better can yield information that is harder to test. An experiment might tell you that a particular feature isn't working, but a conversation and engagement with a customer on the prototype might answer "why." When seeking more information or feedback on your venture, its critical to know which mode you're in: Experimentation or Collaboration.
You can read more about the most popular entrepreneurial methods at the Founder Challenge, where I highlight the work of student founders taking on the challenge of becoming an entrepreneur. By engaging a spectrum approach to entrepreneurship, founders can expand their toolbox and unlock their entrepreneurial potential and the possibility of rapidly advancing their ventures.